An Empirical Study Of The Efficiency Of Companies Listed On GEM

The blood of an enterprise’s operation is fund. The function of fund is reflected byguiding and controlling resources and companies are always facing the problem of financialselection when they engage in production and operation. The economic problems in today’sworld, appear with high-frequency, therefore corporate financing becomes a hot topic as well.On one hand, equity financing is a way of acquiring funds for listed companies and it hassignificant influence on the development of society as a whole. On the other hand, most oflisted companies, especially in our country, prefer and highly reliant on this method.Accordingly, idle funds become one of significant drawbacks causing by raising too muchmoney and as a result, the efficiency of funding will decrease. In China, the features ofcorporate financing in new and high technology companies are quite different from those intraditional organizations, such as higher financing risk and larger capital demand. However, inthose new and high technology companies with small and medium size, their development arealways restricted by capital shortage and financing difficulty. In order to tackle this issue, theGrowth Enterprise Market was launched officially on Oct232009which provided directfinancing channels for those enterprises. The efficiency and effectiveness of capitalintegration, as well as the overall financial efficiency of the GEM become the focus ofattention.In this essay, the financial data for fiscal2010of168new and high technologycompanies which are listed on GEM of Shenzhen Stock Exchange are selected as samples ondemand. In order to test the financing efficiency of these companies, Data EnvelopmentAnalysis will be applied by searching for relevant financial index in CSMAR database.According to the study, the financing efficiency of the listed companies on GEM is not ideal.The analysis and evaluation of the factors that will be carried out in line with thefinancing and efficiency theories and review the related articles of corporate finance as well.In the end, conclusions and recommendations will be given by using DEA model to test andverify the financing efficiency of those sample companies.